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DECREE

Providing the financial management mechanism applicable to investment projects in the form of public-private partnership

Pursuant to the June 19, 2015 Law on Organization of the Government; and the November 22, 2019 Law Amending and Supplementing a Number of Articles of the Law on Organization of the Government and Law on Organization of Local Administration;

Pursuant to the June 25, 2015 Law on the State Budget;

Pursuant to the June 22, 2015 Law on Promulgation of Legal Documents; and the June 18, 2020, Law Amending and Supplementing a Number of Articles of the Law on Promulgation of Legal Documents;

Pursuant to the June 20, 2012 Law on Price;

Pursuant to the June 18, 2014 Law on Construction; and the June 17, 2020 Law Amending and Supplementing a Number of Articles of the Law on Construction;

Pursuant to the June 21, 2017 Law on Management and Use of Public Assets;

Pursuant to the November 23, 2017 Law on Public Debt Management;

Pursuant to the June 13, 2019 Law on Public Investment;

Pursuant to the November 26, 2019 Law on Securities;

Pursuant to the June 17, 2020 Law on Enterprises;

Pursuant to the June 17, 2020 Law on Investment;

Pursuant to the June 18, 2020 Law on Investment in the Form of Public-Private Partnership;

At the proposal of the Minister of Finance;

The Government promulgates the Decree providing the financial management mechanism applicable to investment projects in the form of public-private partnership.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulations

1. This Decree provides the financial management mechanism applicable to investment projects in the form of public-private partnership (below referred to as PPP projects), including:

a/ Financial plans of PPP projects;

b/ Issuance of bonds by PPP project enterprises;

c/ Management and use of state capital invested in PPP projects;

d/ Account finalization of investment capital for completed infrastructure facilities and systems;

dd/ Order and procedures for handling of assets upon transfer of infrastructure facilities and systems to competent state agencies;

e/ Sharing of increased or decreased amounts in turnover.

2. Public investment funds paid for project preparation by competent agencies, PPP project preparation units, bid solicitors, PPP project appraisal councils, and units assigned to appraise PPP projects specified in Article 73 of the Law on Investment in the Form of Public-Private Partnership (below referred to as the PPP Law), provided as support for construction of infrastructure facilities and systems specified at Point a, Clause 5, Article 70 of the PPP Law; and used for compensation for ground clearance, support and resettlement or support for construction of makeshift works specified in Article 72 of the PPP Law shall be managed, used and paid under regulations on management, use, payment, and account finalization for projects using public investment funds.

3. The order and procedures for handling of assets upon transfer of infrastructure facilities and systems to competent state agencies under Point dd, Clause 1 of this Article must comply with PPP project contracts, the law on management and use of public assets, and relevant laws.

Article 2. Subjects of application

This Decree applies to parties to PPP project contracts; state management agencies, and agencies, organizations and individuals involved in PPP investment activities.

Chapter II

FINANCIAL PLANS OF PPP PROJECTS, FUNDS FOR IMPLEMENTATION OF PPP PROJECTS OF INVESTORS AND PPP PROJECT ENTERPRISES

Section 1

FINANCIAL PLANS OF PPP PROJECTS

Article 3. Principles of making financial plans of PPP projects

1. A PPP project’s financial plan must state all lawful expenses and revenues in stages of investment preparation, implementation and operation of the PPP project under regulations.

2. Financial indicators of a financial plan shall be calculated based on after-tax cash flows discounted at the weighted average discount rate of interests on mobilized funding sources and the investor’s return on equity.

3. Actual turnover means the whole turnover earned from the provision of public products and services, exclusive of value-added tax.

4. The currency used in financial plans is Vietnam dong.

Article 4. Contents of financial plans

A financial plan in the prefeasibility study report or feasibility study report of a PPP project must have the following contents:

1. Total investment amount of the project.

2. Funding sources for implementation of the project:

a/ State capital amounts (if any) used for purposes specified in Articles 70 and 72 of the PPP Law:

- Total public investment fund amount as support for the construction of infrastructure facilities and systems; compensation for ground clearance, support and resettlement; and support for construction of makeshift works;

- Value of public assets in accordance with the law on management and use of public assets;

- Disbursement schedule of public investment funds; time of allocation of capital being public assets.

b/ The investor’s equity:

- Total equity amount contributed to the project;

- Disbursement schedule of the equity amount.

c/ Funds mobilized by the investor:

- Total mobilized fund amounts (by type of funding sources);

- Time of loan borrowing and term of issued corporate bonds (if any), disbursement schedule of fund sources mobilized by the investor;

- Expenses for fund raising: interest rates for loans and issued corporate bonds (if any) and necessary expenses for fund raising (if any);

d/ A competent agency shall refer to medium-term and long-term loans’ interest rates applied by commercial banks; and loans’ interest rates applicable to similar projects for making a financial plan in the prefeasibility study report or feasibility study report (if any).

3. Proposals on incentives and security (if any).

4. The investor’s return on equity.

5. Estimated expenses in the course of operation of the project.

6. Plan on investment capital recovery and the investor’s profit:

a/ Estimated public service prices and charges, specifying the reserve price and charge rate, principles of price and charge adjustment in accordance with regulations on prices and charges and relevant regulations;

b/ Estimated turnover from every lawful revenue source of the PPP project enterprise;

c/ Implementation duration, operation, capital recovery and profit of the investor;

d/ For PPP projects applying BTL or BLT contracts, a plan on investment capital recovery and the investor’s profit must additionally have contents on funds used for making payment to the PPP project enterprise, including:

- Payment schedule of public investment funds used for implementation of the PPP project;

- Payment schedule of funds used for regular expenditures for the PPP project enterprise in the operation stage;

- Revenues from provision of public services of the PPP project enterprise (if any).

7. Amounts to be remitted into the state budget (if any), for PPP projects applying O&M contracts.

8. Indicators for analyzing and evaluating feasibility of a financial plan include:

a/ Net present value (NPV);

b/ Internal rate of return (IRR);

c/ Benefit-cost (B/C) ratio;

d/ Levels of impacts of the (above-mentioned) financial indicators upon a change in the total investment amount, operation expenses, turnover or project contract term;

dd/ Based on specific characteristics of the PPP project, a competent agency may set additional financial indicators such as debt to equity ratio, debt-service coverage ratio, quick ratio, solvency ratio, and measures to ensure capital adequacy under current regulations in order to select an efficient investment project.

9. This Article serves as a basis for related agencies to make, appraise and approve dossiers of invitation to prequalification or bidding dossiers, and signing of PPP project contracts.

Section 2

FUNDING SOURCES FOR IMPLEMENTATION OF PPP PROJECTS OF INVESTORS AND PPP PROJECT ENTERPRISES

Article 5. Equity of investors

1. Equity of an investor participating in a PPP project is equity actually contributed by an independent legal person or a joint-name entity of independent legal persons according to the charter of the PPP project enterprise and terms of the PPP project contract.

2. Bases for determination of equity of an investor:

a/ The investor’s latest annual financial statement audited by an independent audit firm and audited interim financial statement (if any) in accordance with law;

b/ For an institutional investor established in the year, its equity shall be determined based on its financial statement audited by an independent audit firm for the period from the time of its establishment to the time of its participation in the PPP project or its audited latest interim financial statement prior to the time of its participation in the PPP project in accordance with law; at the same time, the owner’s representative, owner or parent company shall make a written commitment and financial statement proving adequacy of equity for capital contribution according to the PPP project’s financial plan;

c/ If the investor concurrently makes investment in different projects and other long-term financial investments (if any), it/he/she shall make a list of such projects and other long-term financial investments and ensure that its/his/her total equity can fully cover equity amounts it/he/she has committed for all of these projects and other long-term financial investments under regulations;

d/ Dossiers of invitation to prequalification or bidding dossiers must specify bases for determination of equity of investors and requirement on time for determination of equity of investors to serve as a basis for evaluation of financial capacity of investors;

dd/ At the time of signing the PPP project contract, the investor or PPP contract enterprise shall send to a competent agency or PPP project contract-signing agency a plan to ensure adequacy of equity and documents proving its/his/her satisfaction of the requirement on equity adequacy as stated in the PPP project contract to serve as a basis for the supervision of capital mobilization by the investor or PPP project enterprise.

3. Investors shall take responsibility before law for accuracy and lawfulness of provided figures and documents related to equity and allocation of equity to ongoing projects and other long-term financial investments, and the plan on mobilization of equity according to the implementation schedule of the PPP project.

Article 6. Mobilization of loans, corporate bonds and other lawful funding sources for project implementation

1. Loans and funds mobilized from issuance of corporate bonds and other lawful funding sources by the time of project contract negotiation shall be determined based on a written commitment or agreement between the lender, bond purchaser or bond issuance-underwriting institution and the investor or PPP project enterprise. The total fund amount committed by the lender, bond purchaser or bond issuance-underwriting institution must be at least equal to the fund amount which the investor or PPP project enterprise has to mobilize.

2. The total loan amount, including funds mobilized through issuance of corporate bonds and other forms of loan borrowing (if any), must not exceed the total loan amount stated in the PPP project contract.

3. A PPP project enterprise may only carry out private placement of non-convertible bonds or bonds not linked with warrants after signing the PPP project contract.

4. The issuance of bonds by a project enterprise must comply with the PPP Law and the Government’s decree on private placement of corporate bonds and trading of privately placed corporate bonds in the domestic market and offering of corporate bonds to the international market by corporations other than public companies.

5. A PPP project enterprise that wishes to privately place corporate bonds in the domestic market must comply with Clause 4 of this Article, and satisfy the following conditions:

a/ Having fully paid both principal and interest of issued corporate bonds or due liabilities during 3 consecutive years (if any) prior to the bond issuance;

b/ Having a plan on issuance of corporate bonds approved by a competent authority in accordance with regulations on private placement of corporate bonds and trading of privately placed corporate bonds in the domestic market, and conformable with the financial plan in the signed PPP project contract;

c/ Having its financial statement of the year preceding the year of bond issuance audited by an audit firm qualified for auditing financial statements of units having public interests. A PPP project enterprise having operated for less than 1 year is not required to have its financial statement of the year preceding the year of bond issuance audited under Clause 3, Article 78 of the PPP Law.

6. Eligible for participating in private placement/offering of corporate bonds are professional securities investors under regulations on private placement of corporate bonds and trading of privately placed corporate bonds in the domestic market. Participants in the offering of corporate bonds to the international market must comply with regulations of the bond-issuing market.

7. The bond issuance plan of a PPP project enterprise must comply with the Government’s decree on private placement of corporate bonds and trading of privately placed corporate bonds in the domestic market and offering of corporate bonds to the international market and the following provisions:

a/ The volume and term of corporate bonds to be issued must comply with the financial plan stated in the signed PPP project contract;

b/ The project enterprise has a plan on payment of bond principals and interests in case its contract is terminated under Clause 2, Article 52 of the PPP Law.

8. The regime of disclosure of information on issuance of corporate bonds by a PPP project enterprise must comply with regulations on information disclosure upon private placement of corporate bonds and trading of privately placed corporate bonds in the domestic market and offering of corporate bonds to the international market and the following provisions:

a/ Disclosure of information prior to bond offering about the project’s financial plan according to the signed contract; procedures for management and disbursement of capital raised through the offering of bonds; and the plan on payment of bond principals and interests specified in Clause 7 of this Article;

b/ Periodical disclosure of information about the management and use of capital raised through bond issuance and implementation progress of the PPP project.

9. In case a PPP project enterprise has its contract terminated under Clause 2, Article 52 of the PPP Law, the payment of bond principals and interests to bond purchasers is specified as follows:

a/ The replacement investor that takes over the project under Clause 2, Article 53 of the PPP Law shall pay bond principals and interests according to terms and conditions of corporate bonds issued by the PPP project enterprise;

b/ In case a competent agency takes over the project upon premature termination of the PPP contract, the PPP project enterprise shall fully pay premature bond principals and interests to bond purchasers, using funds for acquisition of the PPP project enterprise or compensation amounts for PPP project contract termination under Clause 6, Article 52 of the PPP Law, and other lawful funding sources of the PPP project enterprise.

10. A PPP project enterprise shall report to the PPP project contract-signing agency on mobilization and use of funding sources according to terms of the PPP project contract.

Chapter III

MANAGEMENT, USE, AND PAYMENT OF STATE CAPITAL AMOUNTS USED IN IMPLEMENTATION OF PPP PROJECTS

Article 7. Principles of management of state capital amounts used in implementation of PPP projects

1. Public investment funds and value of public assets provided as support for the construction of infrastructure facilities and systems specified in Article 70 of the PPP Law:

a/ The use of public investment funds as support for the construction of infrastructure facilities and systems mentioned at Point b, Clause 5, Article 70 of the PPP Law shall be specified in PPP project contracts regarding the fund ratio, value, schedule, and conditions.

b/ The ratio of state capital amount in a PPP project mentioned at Point a or c, Clause 1, Article 69 of the PPP Law must not exceed 50% of the total investment fund of such project as stated in the PPP project contract. For a project with multiple component projects including a PPP component project, the ratio of state capital amount mentioned at Point a or c, Clause 1, Article 69 of the PPP Law must not exceed 50% of the total investment fund of the component project using state capital.

c/ State capital amounts used in PPP projects mentioned at Point a or c, Clause 1, Article 69 of the PPP Law shall not be included in the plan on capital recovery and profit of the investor.

2. Use of public assets as support for the construction of infrastructure facilities and systems:

a/ The competence, order and procedures for issuing decisions on use of public assets as support for the construction of infrastructure facilities and systems must comply with the law on management and use of public assets;

b/ Public assets used as support for the construction of infrastructure facilities and systems shall be subject to price appraisal in accordance with the law on price and law on management and use of public assets. The time limit for issuance of price appraisal certificates for valuation of public assets is 6 months prior to the date of submission of investment policy for PPP projects to competent authorities for approval.

3. State capital amounts used for payment to PPP project enterprises providing public products and services under BTL or BLT contracts:

a/ For projects for which state agencies or public non-business units that cannot self-finance their regular expenditures or can finance only part of their regular expenditures act as contract-signing agencies, capital amounts used for payment to PPP project enterprises include:

- Public investment funds included in medium-term and annual public investment plans for payment of investment expenses of PPP projects;

- State budget funds reserved for regular expenditures included in annual estimates and revenues (if any) of the PPP projects for payment of operational costs of PPP project enterprises.

b/ For projects for which public non-business units that can self-finance their regular expenditures and investment expenditures act as contract-signing agencies, capital amounts used for payment to PPP project enterprises include:

- Non-business operation development funds of non-business units, state budget funds for development investment expenditures allocated for payment of investment expenses of PPP component projects using state capital in the PPP project;

- Funds from other lawful revenue sources in accordance with law (if any).

c/ Funding sources for payment, payment conditions, to-be-paid capital amounts, time of payment, and payment time limit must be specified in PPP project contracts.

4. State capital amounts allocated from funds for regular expenditures to pay project implementation expenses after contract signing by competent agencies or contract-signing agencies under Clause 3, Article 73 of the PPP Law must comply with the law on the state budget.

5. The State shall pay to a PPP project enterprise the decreased amount in turnover under the mechanism for sharing of increased or decreased amounts in turnover from state budget contingency funds as specified in Article 82 of the PPP Law in accordance with Chapter V of this Decree.

Article 8. Principles of control of payment of public investment funds, funds for regular expenditures, and funds from lawful revenue sources of PPP project enterprises for investment in PPP projects, and payment using state budget contingency funds

1. The State Treasury is the agency assigned to control payment of public investment funds, funds for regular expenditures, and funds from lawful revenue sources of PPP project enterprises for investment expenditures and regular expenditures, and payment using state budget contingency funds in PPP projects.

2. State capital amounts in PPP projects shall be paid when competent authorities assign capital plans and budget estimates in accordance with law.

3. Public investment funds provided as support for the construction of infrastructure facilities and systems specified at Point b, Clause 5, Article 70 of the PPP Law may only be paid for completed work items as certified by the PPP project contract-signing agencies according to the fund ratio, value, schedule and conditions stated in PPP project contracts, and conformable with medium-term and annual public investment fund plans approved by competent authorities.

4. State capital amounts shall be paid to PPP project enterprises providing public products and services under BTL or BLT contracts from the time such products and services are provided as agreed in the PPP project contracts. Periodical payment shall be made on the basis of actual volume and quality of public products and services provided by PPP project enterprises as stated in PPP project contracts, and conformable with medium-term and annual public investment fund plans as well as regular expenditure estimates approved by competent authorities.

5. State capital amounts paid to PPP project enterprises must not exceed state capital amounts (or adjusted state capital amounts) used in implementation of PPP projects approved by competent authorities and stated in PPP project contracts. The state capital amount paid to a PPP project enterprise in a year must not exceed the capital amount allocated under the plan of such year to the PPP project.

6. The State Treasury shall base itself on dossiers of request for payment specified in this Decree submitted by PPP project contract-signing agencies and on PPP project contracts to control the payment of state capital amounts. In case the State Treasury detects that an amount requested for payment is unconformable with the prescribed regime or lacks supporting documents as required, within 3 working days after receiving a dossier of request for payment, it shall notify its payment refusal to the PPP project contract-signing agency, clearly stating the reason.

7. PPP project contract-signing agencies shall take responsibility before law and competent persons for identification of satisfaction by PPP project enterprises of disbursement conditions specified in this Decree and PPP project contracts; be responsible for amounts requested for payment, and supervision and identification of the ratio of disbursed equity amounts of PPP project enterprises according to the PPP project contracts; and ensure the lawfulness of documents in dossiers submitted to the State Treasury and competent agencies.

8. In case of detecting an unlawful document in a dossier of request for payment, the State Treasury may suspend the payment, and request in writing the competent authority that has issued such unlawful document to make reconsideration and proposal. Within 10 working days after making such request, if receiving no reply or receiving a reply that is incompliant with current regulations, the State Treasury shall report it to the superior competent authority and to the finance agency for consideration and handling.

Article 9. Methods of carrying out procedures for payment of state capital amounts via the State Treasury

1. Sending dossiers and receiving dossier processing results directly at the State Treasury’s head office.

2. Sending dossiers and receiving dossier processing results via the Public Service Portal of the State Treasury in case procedure-performing units conduct e-transactions with the State Treasury (the units shall access to, and follow guidance provided on, the Public Service Portal of the State Treasury).

3. Sending dossiers and receiving dossier processing results via the National Public Service Portal.

Article 10. Legal dossiers to be sent once for control and payment of public investment funds, fund for regular expenditures and funds from lawful revenue sources reserved for investment expenditures or regular expenditures for implementation of PPP project contracts

1. A PPP project contract-signing agency shall send to the State Treasury office where the agency opens its accounts 1 legal dossier for the first time (the documents in such dossier may be the originals or copies bearing true-copy stamps of competent agencies that are sent only once until the PPP project contract is liquidated, unless the dossier needs supplementation or modification) before or simultaneously with the time of request for payment of public investment funds, funds for regular expenditures or funds from lawful revenue sources reserved for investment expenditures or regular expenditures in PPP projects.

2. A legal dossier to be sent once must comprise:

a/ A competent authority’s decision on approval of a PPP project and decisions on adjustment of the PPP project (if any);

b/ The PPP project contract and its annexes (if any).

Article 11. Dossiers for control and payment of public investment funds, funds for regular expenditures and funds from lawful revenue sources reserved for investment expenditures or regular expenditures in PPP projects

1. Based on the completed work volume that has been tested for acceptance as well as payment conditions in a PPP project contract, the PPP project contract-signing agency shall make and send to the State Treasury 1 dossier of request for payment of public investment funds as support for the construction of infrastructure facilities and systems as specified at Point b, Clause 5, Article 70 of the PPP Law, which must comprise:

a/ A summary table showing value of the completed work volume requested for payment under the PPP project contract, made by the PPP project enterprise and certified by the PPP project contract-signing agency (provided in Appendix I);

b/ A written request for payment of public investment funds, made by the PPP project contract-signing agency (provided in Appendix II);

c/ A money transfer document as specified in the Government’s Decree No. 11/2020/ND-CP of January 20, 2020, on administrative procedures in the field of the State Treasury.

2. Based on public products and services provided as agreed in the PPP project contract, the PPP project contract-signing agency shall make and send to the State Treasury 1 dossier of request for payment to the PPP project enterprise providing public products and services under BLT or BTL contracts, which must comprise:

a/ A summary table showing quantity and quality of public products and services requested for payment, made by the PPP project enterprise and certified by the PPP project contract-signing agency (provided in Appendix III);

b/ A written request for payment to the PPP project enterprise providing public products and services, made by the PPP project contract-signing agency (provided in Appendix IV);

c/ A money transfer document as specified in the Government’s Decree No. 11/2020/ND-CP of January 20, 2020, on administrative procedures in the field of the State Treasury.

Chapter IV

ACCOUNT FINALIZATION OF INVESTMENT FUNDS FOR INFRASTRUCTURE FACILITIES AND SYSTEMS

Article 12. Account finalization of public investment funds, funds for regular expenditures, and funds from lawful revenue sources reserved for investment expenditures or regular expenditures according to fiscal year

PPP project contract-signing agencies shall carry out account finalization of public investment funds according to fiscal year under regulations on management, payment and account finalization for projects using public investment funds, and carry out account finalization of regular expenditures on an annual basis under regulations on approval, appraisal, notification and synthesis of annual final accounts.

Article 13. Principles of account finalization of investment capital for completed PPP infrastructure facilities and systems

1. After being completed, PPP projects, component projects, mini-projects, independent works, or independent work items of PPP projects must have their reports on account finalization of investment funds audited to serve account finalization of investment capital for completed projects under Article 60 of the PPP Law.

2. For public investment fund amounts provided as support for the construction of infrastructure facilities and systems as specified at Point b, Clause 5, Article 70 of the PPP Law, the PPP project contract-signing agency shall sum up the fund amount disbursed for the PPP project enterprise and audited by an independent audit firm for use as a basis for account finalization of public investment funds in the PPP project as stated in the PPP project contract.

3. Account finalization of investment capital for completed infrastructure facilities and systems is the determination of value of lawful expenses in the investment process to put the project into operation or use as stated in the PPP project contract signed by the PPP project contract-signing agency and the investor or PPP project enterprise in accordance with law.

4. Principles of determining final accounts of expenses for fund raising, contingency funds and costs saved by the PPP project enterprise as specified in Clause 2, Article 61 of the PPP Law and arising expenses must be specified in the PPP project contract in accordance with relevant laws.

5. Based on value of already account-finalized investment capital for completed infrastructure facilities and systems and terms of the PPP project contract, parties to the PPP project contract shall exercise rights and perform obligations (if any).

Article 14. Order and procedures for account finalization of investment capital for completed infrastructure facilities and systems

1. For PPP projects implemented under BOT, BOO, O&M or BLT contracts: The PPP project contract-signing agency and PPP project enterprise shall agree on the selection of a capable and experienced independent audit firm to audit construction investment costs for infrastructure facilities and systems under Clause 3, Article 60 of the PPP Law.

2. For PPP projects implemented under BTO or BTL contracts: After a PPP project is completed, the PPP project contract-signing agency shall send to the State Audit Office of Vietnam a written request for audit of construction investment costs of infrastructure facilities and systems under Clause 3, Article 85 of the PPP Law.

3. For mixed contracts: Based on contents of a PPP project contract, the PPP project contract-signing agency and the PPP project enterprise shall agree on order and procedures for account finalization of investment capital of infrastructure facilities and systems under Articles 60 and 85 of the PPP Law and Decree.

4. A PPP project enterprise shall make and send 1 dossier for account finalization of investment capital of infrastructure facilities and systems of the completed PPP project to the PPP project contract-signing agency within:

a/ Nine months, for projects falling under the investment policy-deciding competence of the National Assembly or Prime Minister;

b/ Six months, for projects falling under the investment policy-deciding competence of ministers, heads of central agencies or other agencies or provincial-level

People’s Councils;

c/ The time when the PPP project enterprise makes a dossier for account finalization of investment capital for completed infrastructure facilities and systems and sends it to the PPP project contract-signing agency as specified at Point a or b of this Clause shall be counted from the date the completed infrastructure facilities and systems are tested for acceptance in accordance with law.

5. The PPP project contract-signing agency shall consider and approve value of account-finalized investment capital for completed infrastructure facilities and systems within 1 month after receiving a complete dossier from the PPP project enterprise as specified in Article 15 of this Decree.

Article 15. Dossier for account finalization of investment capital for completed infrastructure facilities and systems

1. A written request for approval of value of account-finalized investment capital for completed infrastructure facilities and systems, made by the project enterprise (the original). Such request must clearly state agreed contents, disagreed contents and reasons for disagreement between the PPP project enterprise and the audit firm.

2. A dossier of the PPP project contract as specified in Article 46 of the PPP Law (a copy bearing a true-copy stamp).

3. The independent audit firm’s audit report for investment projects implemented under BOT, BOO, O&M or BLT contracts; the State Audit of Vietnam’s audit report for investment projects implemented under BTO or BTL contracts (a copy bearing a true-copy stamp).

4. An inspection agency’s inspection conclusion or examination agency’s examination minutes, a competent state agency’s investigation result in case the PPP project enterprise violates law and is subject to investigation by a competent state agency (a copy bearing a true-copy stamp) (if any).

5. The PPP project enterprise’s report (the original) on compliance with Clauses 3 and 4 of this Article.

Chapter V

SHARING OF INCREASED OR DECREASED AMOUNTS IN TURNOVER

Article 16. Principles of management of revenue and expenditure sources arising from the mechanism for turnover sharing

1. For PPP project enterprises:

a/ An increased amount in turnover shared by a PPP project enterprise with the State under Clause 1, Article 82 of the PPP Law shall be counted as a reduction in turnover when determining the PPP project enterprise’s income liable to enterprise income tax.

b/ The PPP project enterprise shall pay an increased amount in turnover it has shared with the State into the state budget in accordance with the law on the state budget.

c/ A decreased amount in turnover shared by the State with the PPP project enterprise under Clause 2, Article 82 of the PPP Law shall be counted as the PPP project enterprise’s turnover amount from provision of public products and services. The PPP project enterprise is not required to declare and pay value-added tax for the decreased amount in turnover shared by the State with the former under Clause 2, Article 82 of the PPP Law.

2. For the State:

a/ An increased amount in turnover shared by a PPP project enterprise with the State under Clause 1, Article 82 of the PPP Law constitutes a central budget revenue, for projects falling under the investment policy-deciding competence of the National Assembly, the Prime Minister, ministers, or heads of central agencies or other agencies;

b/ An increased amount in turnover shared by the PPP project enterprise with the State under Clause 1, Article 82 of the PPP Law constitutes a local budget revenue, for projects falling under the investment policy–deciding competence of provincial-level People’s Councils;

c/ A state capital amount used as payment for sharing a decreased amount in turnover with a PPP project enterprise:

- A state capital amount used as payment for sharing a decreased amount in turnover under Clause 2, Article 82 of the PPP Law shall be allocated from central budget contingency funds, for projects falling under the investment policy-deciding competence of the National Assembly, the Prime Minister, ministers, or heads of central agencies or other agencies;

- A state capital amount used as payment for sharing a decreased amount in turnover under Clause 2, Article 82 of the PPP Law shall be allocated from local budget contingency funds, for projects falling under the investment policy-deciding competence of provincial-level People’s Councils.

d/ The State shall pay a decreased amount in turnover to a PPP project enterprise under Clause 2, Article 82 of the PPP Law after a competent authority issues a decision on use of state budget contingency funds for PPP projects. A decreased amount in turnover shared by the State with a PPP project enterprise is a turnover exclusive of value-added tax.

Article 17. Order and procedures for sharing increased or decreased amounts in turnover

1. Annually, based on an actual turnover reported by a PPP project enterprise under Clause 1, Article 20 of this Decree, the PPP project contract-signing agency and the PPP project enterprise or investor shall:

a/ Review and compare the actual turnover of the PPP project and the turnover stated in the PPP project contract;

b/ Adjust price and charge levels of public products and services, and adjust the term of the contract as specified in Clause 1 or 2, Article 82 of the PPP Law.

c/ In case there arise conditions for application of the mechanism for turnover sharing as specified in Clause 1 or 2, Article 82 of the PPP Law, the PPP project contract-signing agency shall request the State Audit Office of Vietnam to audit the actual increased or decreased amount in turnover of the PPP project for use as a basis for determining the value of the turnover amount shared between the State and the PPP project enterprise.

2. Based on an audit report of the State Audit Office of Vietnam and the PPP project contract, a PPP project contract-signing agency shall determine the value of a turnover amount shared between the State and the PPP project enterprise, and report it to a competent agency.

3. For an increased amount in turnover shared by a PPP project enterprise with the State and determined by parties under Clause 2 of this Article, a PPP project enterprise shall remit such turnover amount into the state budget within 60 days after the State Audit Office of Vietnam issues an audit report on determination of the increased amount in turnover.

4. For a decreased amount in turnover shared by the State with a PPP project enterprise determined by parties under Clause 2 of this Article, the order and procedures for sharing turnover are as follows:

a/ For projects falling under the investment policy-deciding competence of the National Assembly, the Prime Minister, ministers, or heads of central agencies or other agencies:

- The competent agency shall send to the Ministry of Finance 1 dossier of request for implementation of the mechanism for turnover sharing, which must comprise:

(i) The State Audit Office of Vietnam’s report on audit of the decreased amount in turnover of the PPP project enterprise (a copy bearing a true-copy stamp);

(ii) The PPP project contract-signing agency’s written request for sharing of the decreased amount in turnover (the original), which states the value of the decreased amount in turnover shared by the State with the PPP project enterprise.

- The Ministry of Finance shall assume the prime responsibility for, and coordinate with related agencies in, summarizing and submitting to the Prime Minister for consideration and decision the use of central budget contingency funds to pay for the decreased amount in turnover to the PPP project enterprise under Clause 2, Article 82 of the PPP Law.

b/ For projects falling under the investment policy-deciding competence of provincial-level People’s Councils:

- The PPP project contract-signing agency shall send to a provincial-level Department of Finance 1 dossier of request for implementation of the mechanism for turnover sharing, which must comprise:

(i) The State Audit Office of Vietnam’s report on audit of the decreased amount turnover of the PPP project enterprise (a copy bearing a true-copy stamp);

(ii) The PPP project contract-signing agency’s written request for sharing of the decreased amount in turnover (the original), which states the value of the decreased amount in turnover shared by the State with the PPP project enterprise.

- The provincial-level Department of Finance shall assume the prime responsibility for, and coordinate with related agencies in, summarizing and submitting to the provincial-level People’s Committee for consideration and decision the use of central budget contingency funds to pay the decreased amount in turnover to the PPP project enterprise under Clause 2, Article 82 of the PPP Law.

c/ Competent authorities shall consider and decide on use of state budget contingency funds to pay decreased amounts in turnover to PPP project enterprises within 60 days after finance agencies receive a complete dossier of request for turnover sharing as specified in Clause 4 of this Article.

Article 18. Payment of decreased amounts in turnover from state budget contingency funds

1. Based on a competent authority’s decision on use of budget contingency funds as specified in Clause 4, Article 17 of this Decree, a competent agency (for PPP projects using central budget contingency funds), or PPP project contract-signing agency (for PPP projects using local budget contingency funds) shall send a written request to the same-level finance agency for the latter to issue a payment order to pay for the decreased amount in turnover to the PPP project enterprise and send it to the State Treasury in accordance with the law on the state budget.

2. Based on the finance agency’s payment order, the State Treasury shall check the validity and legality of such payment order and decide on pay-out from state budget funds, and transfer money to the PPP project enterprise’s account in accordance with the law on the state budget.

Chapter VI

REPORTING REGIME

Article 19. Responsibilities of competent agencies, PPP contract project-signing agencies, and state agencies contributing public assets to PPP projects

1. Competent agencies shall report on disbursement of public investment funds, funds for regular expenditures and funds from lawful revenue sources reserved for investment expenditures or regular expenditures to be covered by the state budget for implementation of PPP project contracts in accordance with the laws on public investment, the state budget, and management and use of public assets, and relevant laws.

2. State agencies contributing public assets to PPP projects shall report on use of public assets in PPP projects in accordance with the law on management and use of public assets.

3. Competent agencies shall include commitments on use of state funds stated in PPP project contracts in reports on implementation of PPP projects for reporting to the central-level state management agency in charge of PPP in accordance with Clause 7, Article 94 of the PPP Law.

Article 20. Responsibilities of investors and PPP project enterprises

1. Within 10 days after submitting annual tax finalization dossiers in accordance with the law on tax administration, a PPP project enterprise shall send a report to the PPP project contract-signing agency on actual turnover of the fiscal year for use as a basis for application of the mechanism for sharing of increased or decreased amounts in turnover (if any).

2. PPP project enterprises to which the State assigns public assets shall manage and use such public assets according to PPP project contracts and the law on management and use of public assets; and make reports on use of public assets used in PPP projects in accordance with the law on management and use of public assets.

Chapter VII

TASKS, POWERS AND RESPONSIBILITIES OF AGENCIES, ORGANIZATIONS AND INDIVIDUALS

Article 21. Tasks and powers of the Ministry of Finance

1. To summarize and report to the Prime Minister on the use of central budget contingency funds when there arises the mechanism for sharing of decreased amounts in turnover of PPP projects falling under the investment policy-deciding competence of the National Assembly, the Prime Minister, ministers, or heads of central agencies or other agencies.

2. To assume the prime responsibility for directing the payment and account finalization of state capital amounts in PPP projects and account finalization of investment capital for completed infrastructure facilities and systems.

3. To coordinate with the Ministry of Planning and Investment in reporting to the Government the determination of public investment funds in PPP projects.

4. To coordinate with the Ministry of Planning and Investment in supervising the implementation of financial plans in PPP project contracts of ministries, sectors, central agencies, other agencies, and provincial-level People’s Committees.

Article 22. Tasks and powers of the Ministry of Planning and Investment

1. To assume the prime responsibility for, and coordinate with the Ministry of Finance in, reporting to the Government the determination of public investment funds in PPP projects.

2. To assume the prime responsibility for, and coordinate with the Ministry of Finance, ministries, sectors, central agencies and provincial-level People’s Committees in, supervising the implementation of PPP projects.

3. To coordinate with the Ministry of Finance in reporting to the Prime Minister on the use of central budget contingency funds when there arises the mechanism for sharing of decreased amounts in turnover of PPP projects falling under the investment policy-deciding competence of the National Assembly, the Prime Minister, ministers or heads of central agencies or other agencies.

Article 23. Responsibilities of competent agencies and PPP project contract-signing agencies

1. To implement the PPP Law, Law on the State Budget, Law on Public Investment, Law on Management and Use of Public Property, and Law on Price, their guiding documents, and PPP project contracts.

2. To take responsibility for assessing financial capacity of investors on the basis of dossiers and documents provided by investors, ensuring the selection of investors with sufficient financial capacity to implement PPP projects; to supervise the fulfillment of commitments on mobilization of equity of investors as stated in PPP project contracts.

3. To consider and approve financial handling plans, rights, responsibilities and obligations of contracting parties in case of termination of PPP project contracts under Article 52 of the PPP Law.

4. To inspect and supervise the implementation of PPP projects regarding the mobilization and use of investment capital by investors and PPP project enterprises as stated in PPP project contracts.

5. To urge and direct PPP project contract-signing agencies and PPP project enterprises to carry out account finalization of investment capital for completed infrastructure facilities and systems under regulations.

6. To summarize information on difficulties and problems arising in the implementation of this Decree and send them to the Ministry of Finance for summarization and reporting to the Government.

Article 24. Responsibilities of investors and PPP project enterprises

1. To exercise rights and fulfill obligations stated in PPP project contracts and relevant laws.

2. To coordinate with competent agencies, contract-signing agencies, and agencies or units assigned to manage state capital amounts in PPP projects in completing dossiers for payment of state capital amounts in PPP projects and account finalization dossiers for completed infrastructure facilities and systems.

3. To determine turnover, expenses and other incomes for tax calculation in accordance with the tax laws and this Decree.

Chapter VIII

IMPLEMENTATION PROVISIONS

Article 25. Transitional provisions

1. For PPP projects for which bids have not been closed by the effective date of this Decree, bid solicitors shall extend the time limit for issuance of bidding dossiers in accordance with the bidding law in order to modify the bidding dossiers or dossiers of requirements in accordance with this Decree, ensuring that such modification does not lead to adjustment of the approved investment policy and feasibility study reports.

2. PPP projects for which bids have been closed but PPP project contracts have not been signed by the effective date of this Decree, PPP project contract-signing agencies shall hold negotiations and sign contracts in accordance with Clause 3, Article 101 of the PPP Law and this Decree with regard to the contents concerning the order and procedures for payment of state capital amounts in PPP projects, account finalization of investment capital for infrastructure facilities and systems, and application of the mechanism for sharing of increased or decreased amounts in turnover, ensuring that it does not lead to adjustment of the approved investment policy and feasibility study reports.

3. PPP project contracts signed before the effective date of this Decree may continue to be implemented under PPP project contracts.

4. The account finalization of investment capital for infrastructure facilities and systems for PPP project contracts signed before the effective date of this Decree must comply with the law effective at the time of signing PPP project contracts.

Article 26. Effect

1. This Decree takes effect on the date of its signing.

2. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees, and related agencies, organizations and individuals shall implement this Decree.-